Apartment living, especially in cities, is a modern, and often more affordable way of getting onto the property ladder. But I can’t stress enough how important it is to do a bit of home work first – lenders can be particular about what unit or apartment you’re trying to buy. As experts in the Cairns market and first home owner lending, LendFirst can help you make the right selection up front. Here’s a few examples of what lenders will and won’t do.
Size Matters
The living area, not including any car spaces or balconies, must usually be at least 50m2. Some lenders will look at 40m2 at a push. The property also needs to have at least one separate fully enclosed bedroom.
Postcodes and deposits
Lenders require bigger deposits in some areas, particularly capital cities. In the Cairns region, the postcodes affected are 4870 & 4879. Here you may need 10%-20% deposit if there are more than 10 units in the complex.
Complex Complexes?
Lenders will look at different types of complexes differently. Some of the different types are:
- Traditional – all units are occupied permanently by their owners or rented to long term tenants. These complexes are the most common and are widely accepted by lenders.
- Resorts – resort or holiday apartment complex units are harder to get a loan for. They are either not accepted at all, or you need 20%-30% deposit for the lender to even consider your loan – that can be as much as $45,000 on a property of $150,000. If there’s an onsite manager or office managing the complex, it’s likely to be a resort.
- A mix! – some complexes are not quite resorts/holiday apartments but are also not quite traditional either. They allow a mix of both holiday letting and permanent owner occupiers and they may or may not have an onsite manager. These complexes are often acceptable if you can show that you will live in your property on a permanent basis.
Too many loans with one lender
Sometimes lots of buyers in the same complex will get their loans from the same lender. The lenders don’t always like this, so will put a ceiling on how many loans they will do in each complex. This means that they may decline some new loans.
There’s no way to check this until you make your application – but it doesn’t happen often.
Using LendFirst for your loan means that if this does happen, we simply talk to one of our other lenders and sort it out without hassle.
Don’t go there!
There are some property types that lenders won’t consider at all.
- Studio Apartments – no separate bedroom. The bedroom is in the same open space as the kitchen, lounge or dining area
- Student Accommodation – usually shared bathrooms and kitchens with individual rooms let
- Dual Key – one unit is divided into 2 using a lockable internal door. These are mostly found in resort/holiday apartments
- Hotel/Motel – these are considered ‘serviced apartments’ and are usually unacceptable to lenders
- Time Share – where ownership is shared with other people and access is limited to a specific number of days or weeks each year
- Company title – an older style where the block of units is owned by a company and ownership of ‘shares’ shows ownership of a particular unit. The main problem with these properties is that the consent of the other owners may be needed to sell, lease or mortgage your unit.
As first home owner specialists, LendFirst are experts in helping with unit or apartment purchase. We’ll help you through the maze, make it simple and help you to make wise decisions when purchasing this kind of property.
Key Points
- Check the size of the property before you go and fall in love with it
- Ask questions about the other property owners and occupiers
- Talk to LendFirst to make sure you’re looking at the right property types
